Frogger.. Or Anyone That Can Help. Tax Help!!
I just got lucky buying in the right place and now I can sell for a good profit. I think I should have planned better because I think I am gonna lose a lot of my profit to taxes. Is there anything I can do to fix this?? This is regarding buying and selling vacant improved lots.
i am a divorced mom with no income or a job outside of the home. I do some ebay and get child support.
Last year I bought some investment property to hold. This year I have been buying more and selling some. Now I find myself making an income from buying and selling. At least for the short term, this could be a good way to keep staying home with my 4 kids.
Now, what can I do to protect my profits from taxes?
I just set up an s-corp and an LLC (I am in Florida) but have done nothing with them yet. My properties are held in my name only, not in a trust or LLC. So far I have sold $47000 worth of property this year (40000 of that is profit). That property WAS held at least a year before I sold it.
I am under contract to sell another $78000 worth of property within the next 4 weeks. 2 of those 3 properties I have only owned a couple of months. My orig investment was $30000, so $48000 or there abouts is profit.
I did buy a rental home with some of the profits earlier this year and I also bought another piece of property to sell (i have it listed for sale now).
I am under contract to buy another lot as well (contract is in my name or can i put it into the LLC or S-Corp?). All of my intentions are to buy low and sell high rarely holding property for a year now since things are moving so fast.
Can I put the profits of the property already bought and sold in my name into my corporation?
DO I have to buy property in the name of my new corporation to get the benefits of owning a corporation?
My ex-husband gets to claim my kids as dependents on his taxes because before this year, I have really had no income. Should I change this beginning this year?
I do have my own home in addition to the properties I am buying and selling so i will have some deductions.
What can I do to minimize my taxes and how can I make my s-corp work for me? Do I owe taxes now quarterly?
thank you for your suggestions.
I do not have a tax person anymore because that person still does my ex-husbands taxes and I don't want him discussing my situation with the ex. I am interested in finding a tax attorney or CPA that deals with real estate issues.
Hi thechangingtable:
I am not at all good in
tax matters.Surely someone else will render that advice. But I must congratulate you on the terrific rate of the profis you have earnd in the recent past.
I presume you are specializing in vacant lots.
sayana
For starters congrat's on your success.
I am not an attorney or CPA, nor is this intended to be any legal advise.
For tax purposes, you need take advantage of the benegits afforded you through your corp.
I believe you need contact an attorney and a CPA for guidance. Find an attorney with creative real estate and corporate knowlefge for your corp. Have him/jer hire the CPA. You get the added protection of attorney client privelidge on each as such. Have the attorney set up and review your corp records for added protection.
Good luck and the best to you.
Ozzie
Not a CPA, but here is my opinion:
Nothing can be done with the property you have already flipped.
You can transfer current holding in to a corporation, quick and cheap via quit claim deed.
You can still make offers in your own name and close in the entity. Like: John Smith or assigned (if I remember correctly) in the name field of offer sheet.
If your getting commercial loans then close in the entity (does not hit your credit report). A commerical loan is generally much cheaper to close (no apprasal fee if bank officer does it, lower points, prepaids), and if your holding for short term the ARMs they will offer are decent.
Setting up a S-corp for flipping, or a LLC for holding is probably a good idea. More paperwork in a S-corp, LLC much easier but a higher year fee (In my state at least, you can set up for ~$150, but yearly annual report is $200 vs $20 for s-corp in NC).
Flipping is a dealer activity, so you will owe self-employment taxes on your deals also, reguardless of entity.
An S-corp could shelter you from some taxes... could limit the additional self-employment taxes b/c you can draw a "fair" salary and the rest could be distriubted as a capital gain.
thank you everyone so far with your responses. I have contacted my title company and since the contract I have is assignable I will assign it to my s-corp for the purchase I am closing on next month that I plan on flipping. I am going to transfer my held properties into my LLC using a quit claim deed. I have some lawyers that I am going to consult with and hopefully they can also get me the tax CPA I need. thank you again, christine
Where is DaveT when you need him? He was/is the resident tax expert around here...